David Leather is set to leave Transport for Greater Manchester (TfGM) in January after six years on secondment from multi-national firm Ernst and Young, where he is a partner

Public transport bosses have paid millions of pounds to their departing chief executive’s consultancy company since he joined them ‘on loan’ from the firm in 2006.

David Leather is set to leave Transport for Greater Manchester (TfGM) in January after six years on secondment from multi-national firm Ernst and Young, where he is a partner.

Figures show that TfGM has paid the firm more than £12m since 2006 for taxation advice, for ensuring a £1.2bn investment package is delivered and for the services of Mr Leather at £255,000 a year.

Since 2008, the body has also paid £38m to Metrolink delivery partner Parsons Brinckerhoff.

One of the firm’s directors, Bob Morris, has been seconded to TfGM as chief operating officer since 2009 at a cost of £242,000 a year.

TfGM stressed the multi-million pound payments to the two firms were in no way untoward and said ‘robust procedures’ are in place, and have always been in place, to prevent the two men from ‘buying in’ services from their own companies.

TfGM finance director Steve Warrener said: “Never have they procured any services whatsoever from Ernst and Young and Parsons Brinckerhoff.”

Last year TfGM paid more than £1.4m to Ernst and Young and more than £11.2m to Parsons Brinckerhoff. The cash is part of the millions of pounds of taxpayers’ money spent by TfGM ‘buying in’ expert advice and support. Last year, it made payments of £560m to external bodies and suppliers.

Consultancy firm KPMG has been paid £7.5m over five years for ‘programme assurance work’ and Steer Davies Gleeve has been paid around £6m over five years for ‘professional services’.

Metrolink extension builder MPact-Thales has been paid around £300m over three years.

Fees paid to top pair 'show the value of their roles'

TfGM oversees more than 270m transport journeys a year and is implementing a £1.2bn transport investment package, which will see Metrolink become the biggest tram network in Britain by 2016. TfGM has around 1,500 suppliers.

It says using them provides better value for taxpayers’ money than recruiting permanent staff. The Audit Commission found in January that TfGM has adequate arrangements in place for securing the efficient and effective use of its resources.

Mr Warrener said: “As with other organisations undertaking large-scale projects, it is more cost effective to bring in technical and other specialist expertise for the period necessary to deliver the projects, rather than employ additional staff.

“TfGM also employs ‘consultancy’ services to address a specific need, for example, specialist tax advice, where again it is not cost effective to employ staff to provide these ad-hoc services. We are no different from most other public or private sector organisations in this regard.

“There will always be a cost associated with hiring staff, whether it is on a permanent or an interim basis, and we are confident that using contracted specialists for a limited period delivers the best value for money option for the public as well as our stakeholders.

“We recognise the need to provide our services at best value and we are constantly looking at all ways of becoming more effective and efficient.”

Coun Andrew Fender, chairman of the TfGM Committee, said: “The major capital investment that we are overseeing on behalf of the 10 local authorities in Greater Manchester, which amounts to more than £2bn, is incredibly significant but it is, nonetheless, just part of a wider picture. We play a vital and hugely beneficial role in keeping Greater Manchester’s people, businesses and economy moving – not just by investing in major new facilities, but on a day-to-day basis – which benefits everyone.”

TfGM has been paying Ernst and Young an annual fee of more than £255,000 for Mr Leather’s services as part of the overall cash payments to the firm.

It is also paying Parsons Brinckerhoff a fee of more than £242,000 a year for Mr Morris’s services – a total of more than £498,000 for both men.

It says this is equivalent to a £199,936 salary for Mr Leather, plus 28 per cent that would cover employers’ national insurance and pension contributions. The fee paid to Parsons Brinckerhoff for Mr Morris’s services includes a £189,552 salary equivalent, plus those other costs.

TfGM says the rates have been renegotiated since a total of £774,794 was paid for the two men’s services in 2009-10.

The actual salaries of the two men ar­e paid by their individual firms.

TfGM says payments to Ernst and Young were highest when the transport body was developing a bid for cash from the government’s Transport Innovation Fund.

The work continued until the bid, which was linked to a congestion charge, was rejected in a referendum in 2008.

Mr Leather’s successor, Dr Jon Lamonte, will take over in January. He is currently chief executive of Tube Lines, a subsidiary of Transport for London. His starting salary of £265,000 will rise to £275,000 in January 2014 and £285,000 in January 2015.

Philip Putnam, the most senior civil servant at the Department for Transport, earns up to £174,000 while Graham Dalton, the chief executive of the Highways Agency, earns less than £150,000.

Peter Hendy, the commissioner for Transport for London, earns a £331,000 salary.

Mr Warrener said: “The fees paid for the services of our interim directors are indicative of the value of their roles in the private sector, and they have provided hugely beneficial financial and managerial expertise to TfGM.”

“TfGM is the same as any other organisation delivering important public services. It needs to attract and retain the best calibre of people it can in order to do its job.”

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